Business – Green shoots of recovery

Life can be confusing for small business right now.  In this information age it can be difficult to decide on who to believe.  In an August 12 New Zealand Herald article headlined “Small business hits reverse gear”, Cameron Smith wrote about how economic pressures continue to drive unprecedented stress and burnout for small business owners, while confidence declines.  He cited “new research” by RFI Global showing that earlier post-Covid optimism was in reverse amid ongoing uncertainty in the NZ business climate.  This research has found less than half (48%) of small to medium sized businesses feel confident about the future, with 70% of business owners feeling stressed and burnt out.  For retailers the figure was 85 per cent.

On August 29  – just 17 days later – the ANZ Business Outlook Survey reported that business confidence was at its highest level in a decade!  ANZ’s chief economist Sharon Zollner was quoted in the Herald as saying the survey had found “a flurry of optimism”.

Forward-looking activity indicators had risen strongly, and this was already evident in the responses that had come in at the very beginning of the month, Zollner said “Things are looking up, albeit from a pretty dark place for many firms.”

So if you are struggling to makes ends meet on the Ōrewa strip, or looking for more customers for your products out of Silverdale, how do you rationalise all this?  What actions do you need to take?  Are you missing something, as you’re not seeing any sales growth.  When are new customers going to start knocking on your door?  

We must take note of the ANZ survey.  The data is more recent, though it can be skewed by bigger corporates.  There is more business confidence – the survey respondents reflect that.  But remember that this is about confidence in the future for suppliers of products and services, not those who purchase them. It is a window into the future minds of consumers.  

Out actions as business owners need to be geared, initially, to consolidation. Business owners have come through a tough time, cashflows are tight and wallets are still closed, so we don’t have cash to invest in marketing splurges or product improvements.

Consolidate your current levels of sales and put effort into realistic growth. Your costs have been running tight for some time – they need to continue running tight. Your priority must be cash – keep any extra, don’t spend it yet!  Make sure your customers are experiencing the best service and support you can give them (that doesn’t cost money, just effort), because you want them to keep coming back.  Consolidation will ensure you are prepared for when those green shoots of recovery arrive in your market, so you can properly nurture and develop them.  When demand for your products and services is showing those first signs of growth, market yourself so you take your share of that growth. If you don’t, your competitor will.